Identify the incorrect statements –

Correct option is D

The correct answer is (D) Absolute advantage is higher cost of production for a goods or service

Explanation:
• Absolute Advantage, a concept popularized by Adam Smith, is the ability of an individual, firm, or country to produce more of a good or service than competitors using the same amount of resources.
• This means having a lower cost of production (in terms of inputs) or higher efficiency, not a 'higher cost'.
• If Country A can produce 10 units of wheat with 1 hour of labor, and Country B produces 5 units with 1 hour of labor, Country A has the absolute advantage.
• Therefore, the statement in option D is the exact opposite of the economic definition.

Information Booster:
• Scarcity (Option B) is the fundamental economic problem: human wants are unlimited, but resources are finite.

Additional Knowledge:
• Law of Diminishing Returns (Option A): A short-run concept where increasing one variable factor while keeping others fixed leads to a point where marginal product decreases.
• Scarcity (Option B): This is the 'major reality' because it forces individuals and societies to make choices and trade-offs.
• Collusion (Option C): Often occurs in oligopolistic markets where firms cooperate (like a cartel) to set prices or limit output to increase collective profits.